PORTUGAL PIONEERS THE NEW ENERGY ECONOMY

Portugal Gives Itself a Clean-Energy Makeover
Elisabeth Rosenthal, August 9, 2010 (NY Times)

"Five years ago, the leaders of this sun-scorched, wind-swept nation made a bet: To reduce Portugal’s dependence on imported fossil fuels, they embarked on an array of ambitious renewable energy projects — primarily harnessing the country’s wind and hydropower, but also its sunlight and ocean waves…Nearly 45 percent of the electricity in Portugal’s grid will come from renewable sources this year, up from 17 percent just five years ago … And Portugal expects in 2011 to become the first country to inaugurate a national network of charging stations for electric cars.

"While Portugal’s experience shows that rapid progress is achievable, it also highlights the price of such a transition. Portuguese households have long paid about twice what Americans pay for electricity, and prices have risen 15 percent in the last five years, probably partly because of the renewable energy program…Still, aggressive national policies to accelerate renewable energy use are succeeding in Portugal and some other countries…By 2025…Ireland, Denmark and Britain will also get 40 percent or more of their electricity from renewable sources; if power from large-scale hydroelectric dams, an older type of renewable energy, is included, countries like Canada and Brazil join the list…The United States, which last year generated less than 5 percent of its power from newer forms of renewable energy, will lag behind at 16 percent (or just over 20 percent, including hydroelectric power)…"

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"To force Portugal’s energy transition, [Portugal] restructured and privatized former state energy utilities to create a grid better suited to renewable power sources. To lure private companies into Portugal’s new market, the government gave them contracts locking in a stable price for 15 years — a subsidy that varied by technology and was initially high but decreased with each new contract round…Compared with the United States, European countries have powerful incentives to pursue renewable energy. Many, like Portugal, have little fossil fuel of their own, and the European Union’s emissions trading system discourages fossil fuel use by requiring industry to essentially pay for excessive carbon dioxide emissions.

"Portugal was well poised to be a guinea pig because it has large untapped resources of wind and river power, the two most cost-effective renewable sources. Government officials say the energy transformation required no increase in taxes or public debt, precisely because the new sources of electricity, which require no fuel and produce no emissions, replaced electricity previously produced by buying and burning imported natural gas, coal and oil. By 2014 the renewable energy program will allow Portugal to fully close at least two conventional power plants and reduce the operation of others…"

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"If the United States is to catch up to countries like Portugal, energy experts say, it must overcome obstacles like a fragmented, outdated energy grid poorly suited to renewable energy; a historic reliance on plentiful and cheap supplies of fossil fuels, especially coal; powerful oil and coal industries that often oppose incentives for renewable development; and energy policy that is heavily influenced by individual states…The relative costs of an energy transition would inevitably be higher in the United States than in Portugal. But as the expense of renewable power drops, an increasing number of countries see such a shift as worthwhile…

"Portugal’s venture was driven by necessity. With a rising standard of living and no fossil fuel of its own, the cost of energy imports — principally oil and gas — doubled in the last decade, accounting for 50 percent of the country’s trade deficit, and was highly volatile. The oil went to fuel cars, the gas mainly to electricity…Energy experts consider Portugal’s experiment a success. But there have been losers…In Portugal, as in the United States, politicians have sold green energy programs to communities with promises of job creation. Locally, the effect has often proved limited…"